PRC-1 · Chapter 2 · Question 31 of 100
'Zephyr Tech' sells goods with a list price of Rs. 100,000 to a bulk buyer, offering a 5% trade discount and a 2% settlement discount if the invoice is paid within 10 days. At what amount is this transaction initially recorded in the sales day book?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 95,000
Explanation
A trade discount is deducted immediately at the time of sale, so the invoice is generated for the net amount (Rs. 100,000 - 5% = Rs. 95,000). The settlement discount is only recorded later in the cash book if the customer actually pays within the 10-day window.
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